331 U.S. 199 (1947), 497, 149 Madison Ave. Corp. v. Asselta

Docket Nº:No. 497
Citation:331 U.S. 199, 67 S.Ct. 1178, 91 L.Ed. 1432
Party Name:149 Madison Ave. Corp. v. Asselta
Case Date:May 05, 1947
Court:United States Supreme Court

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331 U.S. 199 (1947)

67 S.Ct. 1178, 91 L.Ed. 1432

149 Madison Ave. Corp.



No. 497

United States Supreme Court

May 5, 1947

Argued February 11, 1947




1. A wage agreement entered into by direction of the National War Labor Board providing that employees should be paid fixed weekly wages for workweeks of specified length, in excess of 40 hours, and that the "hourly rate" was to be determined by dividing weekly earnings by the number of hours employed plus one-half of the number of hours actually worked in excess of 40, which actually was applied so as to result in a scheduled workweek in excess of 40 hours without effective provision for overtime pay until employees had completed the scheduled workweek, held not in conformity with the overtime pay requirements of § 7(a) of the Fair Labor Standards Act. Pp. 203-210.

2. The "hourly rate" derived from the formula prescribed in the agreement was not the "regular rate" of pay within the meaning of the Fair Labor Standards Act. Pp. 203-210.

3. Walling v. Belo Corp., 316 U.S. 624, and Walling v. Halliburton Co., 331 U.S. 17, distinguished. P. 209.

156 F.2d 139 affirmed.

Respondents sued their employer, petitioner here, to recover sums allegedly due them under the Fair Labor Standards Act, and were awarded judgment in the District Court. 65 F.Supp. 385. The Circuit Court of Appeals affirmed. 156 F.2d 139. This Court granted certiorari. 329 U.S. 817. Affirmed, p. 210. Judgment modified, post, pp. 210, 795.

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VINSON, J., lead opinion

MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.

This employee suit was brought in the District Court to recover overtime compensation, liquidated damages, and a reasonable attorney's fee pursuant to §§ 7(a) and 16(b) of the Fair Labor Standards Act of 1938.1 Recovery was allowed in the District Court, 65 F.Supp. 385, and that judgment was affirmed in the Circuit Court of Appeals, 156 F.2d 139. We granted certiorari to consider the

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important questions [67 S.Ct. 1180] presented relating to the application of the overtime provisions of the abovementioned statute.

Respondents are service and maintenance employees who, during the period in question, worked in a loft building owned by petitioner 149 Madison Avenue Corporation and managed by petitioner Williams & Co. It has been stipulated that respondents were engaged in the production of goods for commerce.2 We are here concerned with the period of employment extending from April, 21, 1942, to December 10, 1943.

Prior to April 21, 1942, employment relations between the petitioners and respondents were governed by a collective wage agreement, known as the Sloan Agreement.3 According to its terms, employees were paid flat weekly wages for workweeks of specified length which, in the case of most of the respondents, amounted to $25 for 47 hours of weekly employment. No hourly rates were specified, nor was any attempt made to compensate employees at the rate of time and one-half for hours worked in excess of 40 in any week.

As the expiration date of the Sloan Agreement drew near, negotiations between the interested parties were initiated for the purpose of reaching agreement on a new contract. After preliminary conferences proved fruitless, the case was certified to the War Labor Board. That

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agency stated its recommendations in a directive order issued July 29, 1942, and on September 1, 1942, the parties entered into the agreement in question, known as the National War Labor Board Agreement. It had been agreed that the terms of the new contract were to be made retroactive to April 20, 1942, the expiration date of the Sloan agreement.

The new contract provided for a workweek of 54 hours applicable to watchmen and a workweek of 46 hours for other regular employees. Weekly wages were established to compensate the 54 or 46 hours of labor which sums were stated to include both payments for the regular hours of employment and time and one-half for the hours in excess of 40. To derive the hourly rate from the weekly wage, the following formula was included:

The hourly rates for those regularly employed more than forty (40) hours per week shall be determined by dividing their weekly earnings by the number of hours employed plus one-half of the number of hours actually employed in excess of forty (40) hours.

Although a literal reading of the above language might seem to indicate the establishment of a variable hourly rate dependent upon the number of hours actually worked in any given week, such was not the practical construction of the parties. Instead of making use of the number of hours actually worked, only the hours the employee was scheduled to work and the weekly wage for such scheduled workweek entered into the calculation of the non-overtime hourly rate.4 The hourly rate as derived from the formula remained constant [67 S.Ct. 1181] therefore regardless of whether the employee worked the scheduled number of hours during the week or a greater or lesser number. In effect, the

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agreement, instead of directly stating a fixed hourly rate in terms of a stipulated amount per hour, provided a formula whereby such a fixed hourly rate could be calculated.

Under the agreement, weekly compensation varied according to the number of hours worked in that week. Thus, in case an employee was unable to work all his scheduled hours due to an "excusable cause," he was paid at the formula rate, with the provision, however, that six of the hours worked should be compensated as overtime regardless of whether the total of hours actually worked was greater or less than 40 in that week. If the employee's...

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